Stop hesitating: Save money by refinancing your mortgage

With interest rates currently near record lows, now could be the time to refinance a mortgage and save money.

Yet many people, especially minorities, are hesitant.

“Despite the prospect of saving thousands of dollars off their loan, many homeowners are not refinancing their loans to take advantage of these historically low interest rates, and we know that’s especially true for minority homeowners,” said Consumer Reports money editor Octavio Blanco.

A recent study found only 6 percent of all refinance applications came from Black borrowers and 9 percent from Latinos.

Nathanael Soto and Jogenia Gonzlez recently took advantage and refinanced for big monthly savings.

"Before I was paying 4.7 percent ... it dropped to 2.8 percent. We are saving about $400 (per month),” said Soto.

So why don’t more homeowners jump in?

Refinancing often takes time and money. Banks need all of the same information you provided when you were first approved for a mortgage including consistent employment, tax returns, credit check and other financial documents.

It can feel overwhelming and not worth it, especially with the stress of the coronavirus pandemic.

Consumer Reports recommends those feeling overwhelmed should work with a federal Department of Housing and Urban Development-approved counseling agency to get started.

“They can help you get your documents in order, explain what refinancing options are best suited for you, assist you in calculating the costs of a refinancing and how long it’ll take to pay those back,” said Blanco.

Finance experts might suggest shopping around beyond your current lender and applying to several banks for refinancing. It could improve your chances of getting approved, and you might even find a better rate.

Then, once you're through the process, make a plan for that savings such as setting up an emergency cash reserve, increasing your retirement contributions or putting money in a 529 Plan for your children's education.